When the time comes to sell your home, you obviously want to make top dollar. As one of the biggest investments in many people’s lives, it is important to sell at a price that makes sense to your bottom line. But many sellers actually do a disservice to themselves by making pricing mistakes. Here are 5 common mistakes sellers make when pricing their home:
1. Basing the price on what was paid
What a seller paid for a property has no real reflection on what a buyer will pay for it. Unfortunately, markets are volatile and go up and down based on a variety of factors. Buyers don’t care what you paid for the home - they care about getting a price that is fair based upon other sales in the area and what is currently on the market. This is the price they will offer and ultimately pay.
2. Expecting lowball offers
In today’s savvy real estate marketplace, lowball offers have really gone to the wayside. Buyers are educated and information is easy to obtain. With sites like Zillow and Trulia making transaction data easy to find, buyers can quickly understand the market - with or without an agent. Don’t inflate the listing price of your home expecting to negotiate down. This may price it out of a ready and willing buyer’s range. It is better to price slightly low rather than high and create bidding (think ebay pricing strategies).
3. Not looking at competition
When you go to buy gas, you typically look at the price of a few places in the area and choose the cheapest option. Real estate works in a similar manner in that buyers tour all properties on the market that meet their needs. It is important to look at other listings in your area that directly compete so you can price yours accordingly.
4. Getting emotional
“Your home is where your heart is.” This phrase rings very true for many people and makes it difficult for them to not get emotional when the time comes to sell. All sellers hope (or think) their home is worth more than it actually is - and some make the mistake of pricing it accordingly. Real estate, like most investments, is based on data and facts and those are what should be used to make your pricing decision.
5. Building renovation costs into the price
Renovations can be a compelling factor in getting a buyer interested in your home. Updated kitchens, baths, etc. can add real value to a price tag. But don’t be fooled that one dollar in means one dollar out. If you spent $24,000 on a renovation, it does not mean you can just add that to the listing price. Look at the home in its entirety compared to the competition and the worth of these finished renovations - not the cost.
Pricing your home too high can mean it sitting on the market longer - and not allowing it to be seen be potential buyers. If a buyer was looking for a home up to $400,000, for instance, they may not boost their price range in their search to homes over this price. If you price your home at $425,000 but would be willing to take $395,000, you are not getting the eyes of these buyers on your listing - or them in the door to see the property. Consider these 5 common pricing mistakes when the time comes to list your home and set a fair and market friendly price.